Uber and Lyft will outperform despite US Labor Secretary's comments that gig workers should be treated as employees, Wedbush says

• Wedbush's Dan Ives maintained his "outperform" ratings for Lyft and Uber in a note to clients on Sunday.
• The managing director of equity research said the rideshare giants are ideal reopening stocks.
• Based on checks with industry legal experts, Ives believes federal involvement in gig workers' status is "highly unlikely."

Wedbush Securities' Dan Ives maintained his "outperform" ratings on shares of Uber and Lyft in a note to clients on Sunday.

The managing director of equity research said he expects the rideshare services to take advantage of a "massive rebound in demand" and show a "healthy profitability trajectory" in their upcoming first-quarter earnings reports.

Ives holds a $76 price target for shares of Uber and an $85 price target for shares of Lyft.

Ives' Uber price target represents a potential 39% jump in share prices from Friday's closing price while his price target for Lyft represents a potential 52% surge.

Shares of Uber and Lyft fell last week after US Labor Secretary Marty Walsh said "in a lot of cases gig workers should be classified as employees" in an interview with Reuters.

Uber and Lyft rely on labor from "gig economy" workers to run their businesses. A changing classification of gig workers to employees would mean increased costs for the rideshare companies.

Ives said that despite a sell-off after the news broke, based on discussions with experts on labor law issues, he believes "federal involvement in this issue would be very complex and highly unlikely without legislation changes, which at minimum would take significant time to play out."

The managing director added that Uber and Lyft have been proactive in pushing the gig economy model and he believes they will ultimately find a "middle ground approach" over the coming years.

Ives also noted Lyft's recent sale of its Level 5 autonomous vehicle unit to Toyota for $550 million will help accelerate its path to profitability and Uber's new delivery and mobility upgrades should bolster its revenues during the beginning of another "roaring 20's."

Overall, Ives appears unfazed by the recent comments from the US Labor Secretary and remains very bullish on the two rideshare giants, calling them a "pure bounce-back demand" play for investors.